Thu Mar 04 2010

I was wrong about location and success

Three years ago I was a big proponent of the idea that where you were in the world wouldn’t greatly affect your chances for success. I wrote about it and spoke about it in conferences. I motivated people to get started on their entrepreneurial ventures anywhere, because opportunity lay everywhere. Today, I don’t think the same way - and this post will correct two or three years of wrong-saying and wrong-thinking.

Not everything I said or thought was wrong. I still believe you can succeed anywhere - although the probability of you achieving that success [1] will certainly vary. I also still believe that any time is a good time to get started - so you might as well step away from the computer, roll up your sleeves and get cranking once you’re done reading this article (or right now if so inclined).##Location matters.

Let us get down to the details. Here’s where location impacts your chances for success: location dictates the likelihood that you’ll be able to exchange ideas with likeminded individuals; it affects your ability to raise funding should you need it at some point in your venture; it affects how easily people will discover your product, interact with it or start adopting it; it affects how media (whatever media that might be) see you and your company.

###Avoiding silos

One of the lessons we learned at WBS was not to become a silo. It is particularly easy for a startup to only look inwards - eventually becoming isolated in its own methods, ideas and processes. Other startups, individuals and even competition are an essential factor in ensuring your eyes are always fresh and on the road. The moment you disconnect from people around you, is the moment your product loses touch with the market, audience and industry - and that is the end game.

Given the previous paragraph, it is easy to see how location plays a huge role in your success. I can illustrate with our own example: WBS works for a very global audience (our consulting is global, and so are our products, like Goplan), but we’re in the most improbable spot ( Google Maps - zoom out for context until you see the whole globe. See what I mean?). Around here, there’s not a lot of companies like us, or individuals who think much like ourselves. Some consider us to be quite lucky (mostly because of our client portfolio); we only believe we try harder [2].

I remember it quite well when we got down to Lisbon for a Google dinner a few months ago and got raised eyebrows and faces of wonder when we said we had done the distance (a couple of hours of driving) just to be with different folks. We weren’t there for the Google fu, or the pizza. We were there because the brief exchanges with other entrepreneurs are extremely valuable. This is why we organize Barcamp Portugal - to give ourselves and others the opportunity to exchange ideas.

###Funding ideas in places with no money

Second main point where location affects your business: your ability to raise capital if you need it. I’m a huge fan of bootstrapping but there are cases (or businesses, rather) where bootstrapping is not a good fit. Usually if you’re trying to solve a problem in an existing industry packed with big players, your chances of requiring capital become higher [3]. If this is your case - if you’ve done the math, found out you need capital - and you don’t have the possibility of raising money, you reach a dead end.

I know of a number of startups and individuals with this problem right now, not just around us but scattered across the globe. The money is out there too, reachable by dialing the right number, writing the right email, getting on the right car/train/airplane. Some people, however, will not dial, write or travel somewhere. That, and the VC/angel eye is not all-seeing. If your visibility is hindered by your location, either you fix the issue (visibility and/or location), or you give up.

###Location and perception of quality

The way people see you, your product and your company is deeply influenced by where you are in the world [4]. I won’t go deep into this point because it should be obvious to you, in your gut, why this happens. The world is an unfair place, where locations, brands and positions sell. If where you are is considered cheap, people perceive you as cheap - or at least cheaper than your competition. This is hard to overcome.

This is a cultural problem that varies from place to place. There are places where products sell because they’re foreign - and the global bias leans towards products from the US. Also, there’s a bit of a startup location bias, where between two competing products, the one who comes from the hippest place is usually seen by a sliver of the audience as somewhat cooler too.

##Do it anyway.

I spent the last few paragraphs (the whole article, really) exposing what’s wrong with starting a business outside tech/capital hotspots like Silicon Valley. This is where I tell you to get started anyway. As an entrepreneur, you’re already ahead of most people - you’re a problem solver, and this is nothing but a problem you can tackle. You can avoid growing in a silo by getting to know people around you who think similarly, attending conferences, using the internet as a communication hub. You can reach elsewhere for capital. You can overcome quality bias by simply being better than the competition.

Location has an impact on your chances of being successful mostly because it makes it harder to get the things you need when you need them (whether that is people, capital or partners). However, ideas are and have always been global. There is a growing number of success stories out there - of people and companies who have succeeded in the weirdest places, against all odds. If you want it bad enough, you’ll still pull it off.

You can also tackle this problem at a deeper level. If you can’t be in Silicon Valley, think of what makes the valley a special place for your particular business, and look for opportunities to make whatever that might be, a little better in your surroundings. Not enough people with the entrepreneurial spirit? Reach out to universities and look for talent there. Not enough capital? Find out creative ways to create small local funds to invest in local entrepreneurs. Who knows if your next business opportunity is hidden in the location problem?

I’d love to hear your thoughts on this issue. If you are an entrepreneur, how does where you are affect what you do and how you do it? If you are an aspiring entrepreneur, is your location preventing you from taking the next step? Chances are other people reading this article will benefit from your input, so do leave a comment below. Thanks!

##Article footnotes

[1] I define success in this context as success at a global scale. Getting a product out there, where “out there” is the world. Naturally, if you’re building a product that affects local audiences only, reaching those audiences effectively would be a success too.

[2] Many argue that the fact that I lived in the valley for a while helped shape the way I think and consequently the way we do business and who we do business with and for. Maybe that’s true, but even that is not because I’m better than anyone else - I usually say I try harder than most.

[3] This is not always the case. Often the lone entrepreneur in the basement will be more creative, much because of constraints, and figure out alternatives to building a business on external money. Sadly, this isn’t always possible.

[4] Writing this I just remembered quite clearly a moment when I was talking to Jeff Clavier of SoftTechVC a few years ago. Having announced I was thinking of coming back to Portugal to start a business, I remember Jeff’s words “why would you ever want to go back if you’ve got so much going for you here?“.