Why You Should Start a Company in… Austin

Seattle has Microsoft millionaires; Silicon Valley has--well, all kinds of bazillionaires. In Austin, they're called "Dellionaires," after the local computer company that made them rich. But Dell isn't the only big company to come out of Austin. The city can also boast that it is the land of Whole Foods, Tivoli, and SolarWinds--and a launch pad event for hot new tech companies in its annual South by Southwest conference. Twitter captured the buzz at the event in 2007; last year, Foursquare was all the rage.

But when the Web site AustinStartup declares in its tag line, "Ditch the valley, head for the hills," it's talking about more than just a smaller alternative to Silicon Valley. Located in the state capital, Austin's tech community has leverage when it comes to state initiatives that help support startup growth. And it's a good testing ground for government-related tech. It has also helped that Austin has a strong chamber of commerce, which sought to bring tech companies like IBM and to the region in the 1970s and 1980s, seeding the South with a source of tech talent.

Recently, Bryan Menell, publisher of AustinStartup and a director at The Dachis Group, spoke to FastCompany.com about what makes Austin's startup scene unique.

What makes Austin a great place for startups?

I think it's a combination of things. We have a pretty low cost of living in Austin. At the same time, there's a really high quality of life. The amount of home that you can buy here is much better than most places and we have nothing but land. But also there's the outdoors and then the sort of cool elements in the city, like South by Southwest. And so it just has those combinations and there's also a great kind of entrepreneurial ecosystem that we built over the years.

We have a large leading venture capital firm in town with Austin Ventures. Also Austin is a state capital and we have a huge university here with the University of Texas in Austin, which keeps a steady pool of really young smart people coming into the workforce all the time. So it's a real unique mix of state government and young smart kids.

Also, there is a state fund--they call it the Emerging Technology Fund, which is meant to help attract and fund technology companies.

How is it helpful to be located in the state capital?

Well, from a global city perspective, it provides a big base of jobs. The state government's going to be a big employer around Austin. And then there are just places where government meets technology. We just launched what's called the Texas Tribune, which is a brand new experiment and a very transparent bipartisan reporting of state government, so it'll be interesting. I work six blocks from the capital, so it provides interesting opportunities to sort of lobby the government around adopting technology and how to use new technologies for their benefit.

So Austin's great because of the quality of life, low cost of living, state capital, university--are we missing anything?

Just this entrepreneurial ecosystem or some people call it sort of like the entrepreneurial scene here. There are enough different things that we have going on, different tech groups and organizations that make it into a scene and it's less important that any one become big or become important, but the fact that there are just so many provides enough diversity for you to find what you're looking for if you're in the hardware and chip technology or if you're in the social software or enterprise. There's enough of that sort of scene here that people can find the things they're looking for.

Are there particular types of startups that would do better in Austin than others?

Sure, I think Austin is known for enterprise software companies, Trilogy and Tivoli and now Spiceworks and Solar Winds going public, so that's a huge base that people really know [about] Austin. Gaming has been solid, too, for a long time. Companies are bought and sold here, so there's a lot of gaming and multimedia stuff going on.

B to C [business-to-consumer] has been kind of bigger in recent years, companies like Home Away and CreditCards.com, and then we have a few of the kind of social media like CheapTweet, so we're starting to see a variety of different things going on. And then there are emerging clean tech and wireless and biotech areas, so I think those are the ones, as well.